A new Audi car on the dockside in Sheerness, Kent.
Photograph: Gareth Fuller/PA

Volkswagen has admitted that it continued selling new cars in the UK fitted with “defeat devices” to cheat diesel emissions tests even after US authorities uncovered the scandal.

The revelation piles pressure on the German carmaker. Richard Lloyd, executive director at consumer group Which?, accused VW of “adding insult to injury” for consumers.

VW revealed on Thursday that it had suspended the sale of 4,000 new vehicles in the UK due to fears that they contained the same software used to deceive testing procedures in the US.

This means that customers had been able to buy the cars until Wednesday, almost two weeks after the scandal began. A spokesman for VW said it did not know how many affected cars had been sold during the period but that it “regrets” that customers had bought them and would now have to get their vehicles fixed. Customers who are in the process of buying an affected car will be able to pull out or choose another VW vehicle.

The spokesman said it had “taken time” to identify affected vehicles. The 4,000 cars, which represent about 3% of the car group’s UK stock, cover the VW, Audi, Skoda and Seat brands. They are fitted with the same EA 189 EU5 engine that is in the 1.2m vehicles that the company recalled on Wednesday. VW will continue to sell unaffected cars, which includes those fitted with the new EU6 engine.

He called for a new diesel car scrappage scheme to encourage owners to trade them in for cleaner models.

However, the car industry launched a robust defence of diesel engines and its practices.

Carlos Ghosn, chief executive of Renault-Nissan and president of Acea, the trade body for the European car industry, urged regulators not to punish the entire sector for the VW scandal. In a letter to EU policymakers, Ghosn said there had not been “full scale cheating” across the industry.

The head of the Society of Motor Manufacturer and Traders in Britain said the VW crisis should not cloud the benefits of diesel engines. Mike Hawes, chief executive of the trade body, told the National Air Quality Conference: “Consumers are right to be concerned following the events of the past 10 days. But we must remember, the actions of one company do not mean collusion. Implicating other brands or companies would be unfair and wrong.”

“It would be wrong to penalise all diesels. The latest diesel vehicles are the cleanest ever, effectively reducing nitrogen oxide levels by 92% compared with earlier generations. They make a significant contribution to climate change targets, an environmental challenge which cannot be ignored.”

Jaguar Land Rover, Britain’s biggest carmaker, has signalled its support for diesel. The company is pressing ahead with plans to launch diesel cars in the US, where the claims against VW first emerged.

JLR launched its first diesel-engine models, the 2016 Range Rover and 2016 Range Rover Discovery, just two weeks ago in the US. However, Joachim Eberhardt, president of JLR North America, said: “We’re not going to change our strategy.”

But Drayson, Britain’s science minister from 2008-10 in Gordon Brown’s government, urged the car industry to accelerate the development of electric vehicles.

Speaking on BBC Radio 4’s Today programme, Drayson said: “We did get it wrong. We now have a much better understanding than we did just a few years ago of what are the health effects of the products of diesel cars and they are literally killing people so it’s clear that in retrospect that was the wrong policy.”

Brown introduced tax breaks for diesel cars as the UK chancellor in 2001 because they emit less CO2 than petrol-powered cars, but it is now known that they emit other harmful pollutants, known as nitrogen oxides.

Drayson said that because about half of cars on the road in the UK and Europe are diesels, action must be taken quickly.

VW has confirmed that 11m vehicles worldwide possess the illegal defeat device, which lower nitrogen oxide emissions in test conditions but allows high emissions on the open road. Owners will be contacted in the coming weeks and asked to take their cars to VW garages for a fix which some experts say could affect the performance of the cars.

The company has set aside €6.5bn (£4.8bn) to fix the affected cars. However, it also faces penalties in the US that could total $18bn (£11.bn), while British law firms say they have been inundated with enquiries from VW drivers about making claims.

VW said an internal investigation into the scandal led by law firm Jones Day would take “at least several months” and confirmed the creation of a new committee to manage the crisis. The VW board said it wanted to name Hans Dieter Pötsch, a former finance director, as chairman of the group following the departure of Ferdinand Piëch earlier this year.

However, concerns are growing about how VW will pay the fines and compensation claims that could emerge from the crisis.

Max Warburton, analyst at Bernstein, said the worst case scenario in the US for VW was a fine of $7.4bn (£4.9bn) from the Environmental Protection Agency, but he said it facedother costs around the world.

Warburton said: “The company has a fairly robust balance sheet – but also has a very conservative approach to financing and its credit rating. We believe that if the cash costs exceed €10bn, a capital raise is highly likely.”

VW has already slowed production at one of its biggest engine factories and frozen hiring at its finance unit, which offers loans to buy new cars.